So, you’ve worked in IT for quite a while and you’re sitting next to a contractor who is doing exactly the same job as you… but they’re getting paid a small fortune and you’re sat there thinking “that’s a pretty sweet gig, maybe I should look into contracting too”.
Before you take the leap into contracting, there are A LOT of things you need to think about. We’ve created a free, comprehensive guide based on many, many conversations with IT professionals over the years.
Hopefully this will help you to decide if contracting is right for you – and if so, when to take the plunge.
1. Why do you want to be an IT contractor?
Often, the 2 most common reasons people want to go contracting are either for money or to add more value.
Some people go contracting purely for money – they see how much contractors are paid and think “I could do that” and off they go. Whereas for others it can be a much more personal decision.
For many IT professionals who have been in the same role for a number of years, they hone their skills and build their knowledge…and then they hit a ceiling. Suddenly, they’re being pressured to become a manager – which means becoming more hands-off and essentially learning a whole new set of skills. One-to-one, management, monitoring and assessing, filling in spreadsheets…. They start feeling like they aren’t adding any real value anymore.
Often, the best contractors are those who fall into the latter category. Why? Because they care.
They have real passion – They love their job and they want to do more of it. They don’t measure themselves on how much they’ve earned but on how much value they have been able to add to each contract. They want to leave the project in a better state than when they joined. These are the contractors who are rarely out of work because they get extended & asked to stay on for more projects. If this is you – then contracting could be a very good career choice for you!
2. Do you have enough experience?
As a contractor, your job is to join the company and start to be productive straight away. You’re being paid a premium because you are an expert in your field. Can you honestly say you will be able to start on the first day, get your feet under the table, and add value to the project straight away? If you only have a couple of years of experience so far then you’re probably going to struggle to compete with some of the talents out there.
3. Is your skill-set in demand?
Contractors in IT are used for 2 reasons – either an interim solution whilst the company is looking for a permanent member of staff, or as a specialist resource to fulfill a project. You need to take this into consideration when starting a contracting career. If your skill-set isn’t in short supply in the permanent market then there will be zero demand for contractors. And if your skills aren’t really used in project work then contracting might not be right for you.
Do your research, look on job boards for contract roles with your skill-set & see how many adverts are out there in the area you live in.
4. Have you saved up?
As a contractor, you may not work for several months each year so it’s imperative that you save up a bit of a nest egg to ensure you can afford your lifestyle. Many work out their “projected earnings” by taking the day rate, multiplying it by 5 (days per week) then multiplying that by 52 weeks in the year. They look at this huge sum of money and think “this is a no-brainer, I definitely want to be a contractor”.
The reality is very different. Firstly, even if you secured a 12-month contract (very rare) you would only work 48 weeks of the year on average (don’t forget to take into consideration bank holidays, sick days & holidays) and as a contractor, you don’t get paid for those days. And secondly, you need to factor in paying your accountant, paying taxes, AND the fact that you might not work all year – you might get a 3-month contract initially, not get extended, and then be looking for work for 6 months! We cannot say this enough – plan ahead.
5. Will you stay away from contracts?
If demand for your skill-set fluctuates in your local area, you may need to look further afield for your next contract. You need to decide upfront if this is something you’re prepared to do and work out how much it is going to cost you. Traveling down to London for a contract might mean you get an extra £100 per day, but how much is a monthly train ticket going to cost you? Are you going to travel to London every day or stay over during the week? And if you’re staying over how much extra will that weekly accommodation cost you?
And it’s not just about money, how much strain will it put on your family life if you’re travelling further afield? If you’re travelling 2 hours each way every day for a contract that’s a lot less time you can spend with your family, a lot more miles on your car, earlier starts and overall you’ll be more tired.
Some contractors love staying away from contracts because it makes them value their family time even more when they are together, but for others, it’s a deal-breaker. You’ll need to think about this before committing to a contract.
6. Handing in your notice
Contractors are needed to start at short notice so on the whole, you will need to be in a position to start a contract immediately. A one or two-week notice period might be doable, but if you are up against other contractors who can start immediately, that might well affect your chances of securing the contract. So – it’s likely that you will need to hand your notice in with no new job to go to, and you may not find a contract straight away. Take that in and really think about it. If you have financial commitments and dependents this is something you will really need to consider before taking the plunge.
The only exception to this rule is when you are joining a company that needs to perform background checks on your before you can join. A great example of this is a financial institution that needs to ensure all their staff is DBS checked.
When hiring for financial institutions, someone on a 4 week notice period is preferable over a contractor who is immediately available because if you’re immediately available you aren’t being paid, so are more likely to accept another contract to start sooner!
On average, a DBS check takes 3 weeks to complete, so you can secure the contract, hand your notice in & work your notice whilst the background check is being completed. This can be a great option for you if you are financially unable to take the risk & hand your notice in with no job to go to.
7. Are you going to be available at the right time of year?
The time of year is absolutely paramount in the IT contracting world if you’re going to secure a good contract. Contractors are often used for project work – so use your experience to think about what time of year your projects tend to kick off, and time your leap into contracting accordingly.
Contracting is cyclical, meaning demand is higher at certain times of year every year. To ensure you don’t take the plunge at the wrong time of year, here’s a rough overview of the cycle:
This is a bit of a free for all. There are a lot of contractors on the market because most contracts will have finished at Christmas, and a lot of companies have their budgets approved in January so it’s a bit of a mad rush to match up the right people with the right contracts.
Is much quieter, there are some contracts left over from January, or some projects that have taken slightly longer to get signed off, but on the whole, there are very few project contracts available at this time. Contract roles in February tend to be interim roles.
Very similarly to February, the majority of contracts are interim roles.
The majority of project budgets are approved in April so large projects tend to kick-off, meaning there’s a very high demand for contractors. Project Managers and BAs tend to be in high demand at this point because they need to start scoping.
May, June & July
All 3 summer months are busy with a high volume of project hires being made. This tends to be when the majority of developers & testers are hired as the “do-er’s” on a lot of software projects.
The demand is still high but it’s much slower because everyone goes on holiday! It is more challenging to get diaries to match up for interviews, and then 9 times out of 10 we will have to wait for someone in finance to sign the role off, which, if they are on holiday, can also prolong the process.
The demand is still there as hiring managers & project leads come back from their holiday, take stock on how they’re doing against their project plan & realise how much work is left to do this calendar year so tend to hire additional contractors to get them to that December deadline.
Demand decreases significantly for project contracts as we head into the winter. Generally, the contracts available in these months are interim roles.
This is the worst time of year to start a contracting career. No projects kick off in December, and there are no interim roles because most teams just have their heads down to hit their deadline in time to enjoy Christmas. There are a few clients who will interview in December for contracts to start in January because they will want to secure the best talent ahead of the January “free-for-all”, but the budgets for those roles tend not to be approved until January so it can be a tense time waiting to find out if you have secured the role!
So, if you’ve read this list and still want to take the plunge, there are a few more “housekeeping” aspects to think about… Read on for part 2 of our IT Contracting guide.